- The hairy chart: Historical Accuracy of LIBOR forward curves
- The Greatest Predictor of Future Stock Market Returns: Total Return = Price Return from Change in Aggregate Investor Allocation to Stocks + Price Return from Increase in Cash-Bond Supply (Realized if Aggregate Investor Allocation to Stocks Were to Stay Constant) + Dividend Return.
- Quit while you're ahead: "The problem with simple P/E ratios (or even P/E ratios based on year-ahead estimates of “forward” earnings) is that stocks are not claims on a single year of earnings. A good valuation measure is just shorthand for a proper discounted cash flow analysis, and relates the current price with observable fundamentals that are representative of decades of likely future cash flows. High P/E multiples on earnings that rely on elevated profit margins. Once a high P/E and a high profit margin are embedded into price, both have to be sustained indefinitely in order for prices to avoid very strong headwinds."
- My Investing Nightmare: "While the Great Depression was objectively more damaging to capital markets, it happened over a much shorter time period. I cannot imagine seeing stocks decline consistently for four years only to be followed by a weak four year rally, then two more years of declines."
- Modern Financial System and Constant Growth, a thread: "A high-leverage system can't take shocks. If businesses, households, and sovereigns are all highly-levered, it requires constant growth to avoid a systemic meltdown."
- Great thread on poker and trading: "Trading decisions should be based on conditional probability."; "Information doesn’t exactly flow perfectly, like they teach you in Finance 101. Frequently, the information will show up first in the option market. A lot of these insider trading cases involve options, and we’re the people who lose the money."
- Minksy Moments in Venture Capital: "Hyman Minsky was a 20th-century economist whose ‘financial instability hypothesis’ is probably the best-known explanation for the boom and bust cycles that characterize public financial markets. But there’s far less examination — in fact, there's almost none — of how Minsky dynamics apply to private markets."
- Lecture on Minsky Moments. Steve Keen has several really interesting economics books, and says sensible things.
- The Oil Market in six tweets: "The industry needs to replace ONE North Sea each year (3mbpd) just to stay still (more in future due to base declines). That needs $600bn. Industry didn’t and does not invest it. Meanwhile demand is back at pre-Covid levels."
- Another good oil Twitter thread
- Oil and the USD, good Twitter thread
- Asset bubbles and interest rates Twitter thread
- Gold and the USD Twitter thread. Some links to papers that justify golds value.
- Does not compute: "To suppose that the value of a common stock is determined purely by a corporation’s earnings discounted by the relevant interest rates and adjusted for the marginal tax rate is to forget that people have burned witches, gone to war on a whim, risen to the defense of Joseph Stalin and believed Orson Welles when he told them over the radio that the Martians had landed."
- Geopolitics Megathread
- Everything must be paid for twice
- The Fed and Crashing Markets - Twitter thread
- The Volatility Tax - Twitter thread
- The folly of ruling out a collapse
- Carl Icahn's Alpha - a Twitter thread
- The Roaring 20's
- Thread on compounding: "For example, take a savings account that starts with $1 and earns 10% per year -- compounded for 100 years. In the FIRST 10 years, the account grows by ~$1.59. In the LAST 10 years, it grows by ~$8,468. This is because wealth curves that grow exponentially are non-linear -- in fact, convex -- with respect to time."